CHRIS HART: It’s time to silence the Eskom Orchestra

Johannesburg may be one of the world’s largest man-made forests, but if you venture into our leafy suburbs, day or night, you are likely to encounter not just a chorus of tweeting birds but a far louder throbbing, nightmare chorus of diesel generators — what I call The Eskom Orchestra. 

The noise and fumes are not what climate activists are seeking when they talk of Net Zero. As the legend goes, Sandton households start their lawnmowers when load-shedding hits because they don’t want their neighbours to think they cannot afford a generator.

The Eskom Orchestra is a reflection of suburban dysfunction and symptomatic of a country in crisis. We are in an unemployment crisis. We are in a growth crisis. We are in an energy crisis.

The need for investment and growth is beyond urgent, so Wednesday’s medium-term budget policy statement must bring an indication — more than an indication — that help is at hand. We require a substantial shift from the failed economic thinking of the past 15 years and towards the economic successes found elsewhere.

The continuing brake on the economy because of electricity constraints should ring every alarm bell in the corridors of power (assuming any of them still work).  Long-term insecurity of electricity supply and price cannot be sustained. This problem is already acute and will be made worse by Eskom’s weak balance sheet and exaggerated cost structure.

I fear it could get far worse before it gets any better. Eskom’s ability to raise capital, even with government support, will be constrained by our country’s looming greylisting, which will reduce access to global capital and increase the cost of borrowing.

In the long term, more power stations must be built, and they are capital intensive. Yet access to capital is becoming difficult. If electricity supply and price security are not resolved the economy is going to go into a depressionary death spiral, so the context is grim for this mini-budget.

Attempts by ministers to rid themselves of the burden of paying for electricity and so many other costs the rest of us face indicates how cosseted from reality our governing class is. It seems Covid-19 lockdown and downtime because of load-shedding have had no measurable impact on government service delivery. Nothing happens whether the lights are on or off!

Meanwhile, the political process has become overly introspective because of machinations in anticipation of the elective congresses of the governing party in December. So the big question is: are our cosseted policymakers aware of the depth of the crisis SA is facing?

The medium-term budget will provide a clue. For growth to happen and jobs to be created and restored this and future budgets must reverse the politically seductive trend of shifting resources towards consumption, and start shifting resources to leverage a substantial increase in investment.

This budget policy statement must start providing South Africans with hope for an end to the self-inflicted damage that populist posturing and pursuit of bad, growth-hampering policies have caused. In energy in particular we need aggressive and substantial tax incentives to  resolve the generation shortage speedily. We need to power up industry and deliver reliable power to the people.

The government and Eskom have revealed their limitations. Improvement can happen fast enough only if South Africans can get significant tax relief to incentivise the required investment. Avenues such as carbon financing need stronger support. We need assistance with financial guarantees to help mobilise capital into energy infrastructure investment.

After 2021’s COP26 conference in Glasgow the Treasury has been promised significant external funding resources to help SA meet its commitment to the journey to Net Zero by 2050. We need to get proof of funds (so far only cheap politic-talk) and establish accessible disbursement channels.

If we want solutions that work, the money needs to be channelled to a capable and effective private sector as opposed to trying to use it to solve Eskom and the government’s problems. There will not be much return if we just throw more billions into a bottomless pit, especially when so much corruption, waste and ineptitude still festers there. Bailouts never saved SAA. Even so, there have been several predictions that once again we will see more billions wasted bailing out our unfixable state-owned enterprises. 

Will this budget be used introspectively to resolve the government’s problems as opposed to the country’s problems? Finance minister Enoch Godongwana has more than enough smart hats in which to preen and pose; it’s time he paid less attention to his wardrobe and more to the country’s power crisis.

The government hasn’t had a good track record in the past 15 years. It has a tendency to prioritise its own needs and problems, as opposed to benefiting the country as a whole. This budget should start looking at ways private sector investment can be involved in municipal energy distribution systems,  and we need to be looking just as urgently at incentives for private sector involvement in water infrastructure — another ticking time bomb.

Godongwana may want to keep his plans under one of his many hats until the budget in February, the occasion for big tax announcements. But this will not be good enough. He needs to give a clear indication of direction, even if no specific tax measures are unveiled. He must signal what is ahead so people can start planning. 

The situation is beyond urgent. We need an actual plan of action, not a bucketful of political sweet talk and laundry lists. The resources should start to be redirected to the capable private sector, which can deliver effectively what is required.

If our ministers cannot chart a clear course ahead in tackling the electrical power crisis, why on earth should the people of SA allow them to hold on to their political power for a day longer?

• Hart is executive chair of the Impact Investment Group.